Sterling Real Estate Partners, a joint venture between Barker Pacific Group (BPG) and Pacific Real Estate Partners, has acquired Spring Valley Apartments in Austin. The property, an 11-building, 230-unit apartment community, is the largest asset yet acquired by the partnership.
Built in 2001, the garden-style apartment is located on about nine acres. Common amenities include fitness and business centers, clubhouse, basketball court, playground, and a swimming pool and spa. The buyer is going to treat the deal as a value-add play, planning to invest in the property by improving landscaping, exterior paint, signage; overhauling the office and clubhouse areas; and renovating interior units, particularly the kitchens.
“We see a great opportunity by repositioning and improving the project,” said Michael Barker, principal at Sterling Real Estate Partners and BPG’s CEO and managing director. The company focuses on value-adds in such markets as Austin, but also San Antonio, Phoenix, Las Vegas and Reno.
Austin a Strong Apartment Market, But Rents Dropped
Austin has had a hot apartment market since the end of the recession, with annual rental increases every year—until 2017. According to RealPage, among the 50 largest U.S. apartment markets, Austin was the only one last year to see a drop in rents, which fell 0.7 percent compared with 2016.
RealPage said that new supply in Austin was a factor, with developers completing more than 10,400 units last year, and adding 18 percent to the market’s apartment inventory over the last four years. But the company posited that a stronger factor in pushing rents down might be that Class B and C rents have already gone up as much as the market can bear, climbing roughly 40 percent since 2010.